CORSIA Could Be ASEAN’s Billion-Dollar Carbon Market Test, But Singapore May Hold the Key to Making It Work

SINGAPORE, July 2, 2026 – Aviation has long been one of the most difficult sectors to decarbonise. Aircraft efficiency gains, operational improvements and Sustainable Aviation Fuel will all matter, but none of these solutions will scale quickly enough on their own to address the sector’s near-term emissions challenge.

That is why the Carbon Offsetting and Reduction Scheme for International Aviation, better known as CORSIA, is becoming one of the most consequential compliance carbon markets in the world.

A new report by Boeing, GenZero and Abatable, Unlocking the billion-dollar CORSIA potential in ASEAN, makes a timely argument: Southeast Asia could become a significant supplier of CORSIA-eligible carbon credits, while also helping its own airlines meet their compliance obligations.

The numbers are striking. ASEAN could supply up to 348 million CORSIA Eligible Emissions Units, or CEEUs, over the next decade. These units could have a combined economic value of between US$1.6 billion and US$8.5 billion at current market prices, while also supporting nearly 32,000 direct jobs.

For a region still working to define its role in international carbon markets under Article 6 of the Paris Agreement, this is not a marginal opportunity. It is a serious test of whether Southeast Asia can convert carbon project potential into credible, authorised, compliance-grade supply.

For Singapore, the story is more nuanced. The city-state is not positioned as a major source of CORSIA credit supply. Its own CORSIA-aligned project volume is limited compared with its neighbours. But Singapore may still become central to the market’s development as a demand centre, trading hub, policy reference point and regional convening platform.

ASEAN’s CORSIA Opportunity Is Real, But Still Largely Locked

CORSIA was created to help international civil aviation achieve carbon-neutral growth to 2035. Airlines covered by the scheme must compensate for emissions growth above the baseline by purchasing and retiring eligible carbon credits.

For the 2024–2026 First Phase, airlines globally are expected to require close to 200 million tonnes of CORSIA-eligible units. ASEAN airlines alone are expected to require around 17 to 18 million units during this period.

The difficulty is supply. As of 1 June 2026, global CORSIA-eligible supply stood at 36.6 million tonnes. ASEAN accounted for only 2.6 million eligible units, issued from four projects in Cambodia and Lao PDR. That represents 7.1 per cent of global eligible supply, but just 1.3 per cent of expected First Phase demand.

This gap is not because Southeast Asia lacks carbon projects. The region has 54 CORSIA-aligned projects that have issued 18.2 million units but lack the host country Letters of Authorization needed for CORSIA use. If authorised, these could become immediately available to airlines.

Put simply, ASEAN already has enough existing and aligned supply, 20.8 million units, to cover the expected 17 to 18 million tonnes of First Phase obligations from ASEAN airlines. The problem is not absence of mitigation activity. The problem is converting eligible-looking carbon credits into fully authorised CEEUs.

This distinction matters. A carbon credit does not become usable for CORSIA simply because it is issued by a recognised carbon standard. It must also receive host country authorisation for CORSIA use and be backed by a corresponding adjustment, ensuring the emissions reduction is not also counted towards the host country’s own Nationally Determined Contribution.

That Article 6 accounting requirement is what gives CORSIA integrity, but it is also what slows the market down.

Article 6 Is the Bottleneck

The report’s central message is that CORSIA supply in ASEAN will depend heavily on how quickly governments build the institutional machinery to authorise credits under Article 6.

This is not a simple administrative step. Governments must assess whether authorising carbon credits for international aviation could weaken their ability to meet domestic climate targets. They need to map project types against national emissions sources, understand whether mitigation outcomes are already embedded in NDC delivery plans, and decide which sectors can safely generate internationally transferable mitigation outcomes.

The risk governments fear is “overselling”. If too many emissions reductions are authorised for external use, a country may later find itself short of mitigation outcomes needed to meet its own NDC.

That concern is legitimate. But an overly cautious approach may also leave economic value, climate finance and project investment on the table.

The report recommends that ASEAN governments map CORSIA-aligned supply against national climate measures, establish cross-ministerial coordination, identify priority project types, use CORSIA to attract mitigation investment and pilot authorisations with limited volumes before scaling up.

This is exactly the kind of practical, sequenced approach the region needs. The countries best placed to move first are those that already have Article 6 frameworks, Designated National Authorities, bilateral agreements or prior experience with international carbon mechanisms.

Thailand, Cambodia and Lao PDR stand out in the report as having made the most progress. Cambodia and Lao PDR already host the region’s four CORSIA-eligible projects. Thailand has completed its first internationally transferred and correspondingly adjusted ITMO under Article 6.2 with Switzerland and has an operational authorisation process.

Viet Nam has enacted a detailed legal framework for Article 6 transfers, though it has not yet issued Letters of Authorization. Indonesia, Malaysia, the Philippines, Myanmar, Brunei and Timor-Leste remain at varying stages of readiness. Singapore is different.

Singapore Is More Buyer, Hub and Rule-Shaper Than Supplier

Singapore’s own CORSIA supply potential is modest. The report identifies two operational projects in Singapore that are CORSIA-aligned and have issued 0.08 million tonnes that could become CEEUs with authorisation and corresponding adjustment. These projects could issue an additional 0.48 million tonnes to vintage 2035.

That is small relative to the regional opportunity. Singapore’s importance lies elsewhere.

First, Singapore is a meaningful demand centre. Singapore Airlines and Scoot have already retired 150,000 CEEUs for CORSIA compliance purposes. That matters because early airline demand signals are critical in a market still struggling with liquidity, confidence and price discovery.

Second, Singapore is a carbon market hub. It has deep financial infrastructure, a sophisticated regulatory environment, experienced sustainability professionals, regional airline connectivity and active institutions working across carbon markets and climate finance. The report’s expert advisory committee itself included Singapore-based or Singapore-linked stakeholders, including Climate Impact X, OCBC and Singapore Airlines representatives.

Third, Singapore is a reference point for Article 6 governance, even though it is primarily a buyer country. The report describes Singapore as having an extremely robust carbon framework, while operating predominantly as a procurer of inbound ITMOs under bilateral Implementation Agreements rather than as a supplier of credits outward.

That role could be powerful. ASEAN does not only need project supply. It needs market architecture. It needs standardised procurement practices, insurance clarity, transaction platforms, legal documentation, risk management, demand aggregation and credible intermediaries. Singapore is well positioned to provide many of these functions.

If Cambodia, Lao PDR, Thailand, Viet Nam, Indonesia or Malaysia can supply more authorised CORSIA credits, Singapore could help connect that supply to airline demand, finance, trading infrastructure and regional policy coordination.

The Airline Demand Signal Cannot Wait

The report rightly notes that supply will not unlock unless airlines send clearer demand signals.

Many airlines are still assessing market conditions, building procurement processes and trying to understand eligibility rules, pricing, insurance and reputational risk. That caution is understandable. CORSIA procurement is not the same as buying voluntary carbon credits for a corporate climate claim. These are compliance instruments with regulatory, legal and accounting consequences.

But waiting too long may increase exposure. Airlines covered by the First Phase have until January 2028 to purchase and cancel units for their 2024–2026 obligations. As the deadline approaches, demand could become more concentrated, creating pricing pressure if eligible supply remains limited.

Singapore Airlines’ early retirement is therefore significant. It demonstrates that airlines can begin building operational readiness now. Malaysia Aviation Group has also conducted purchasing pilots and developed a procurement framework.

Others should follow. Pilot transactions allow airlines to test internal coordination across legal, sustainability, finance, risk and procurement teams. They also help clarify how credits move from purchase to retirement, what documentation is needed, how insurance works and how procurement risks should be managed.

In a market where eligible supply is scarce and uncertainty remains high, learning by doing may be a better strategy than waiting for perfect clarity.

ASEAN’s CORSIA Opportunity Is Also a Development Story

The economic case for ASEAN is not only about carbon credit sales. The report highlights wider socioeconomic benefits from the types of projects that could serve CORSIA in the region. Existing and incoming projects have reported reduced indoor air pollution, lower likelihood of gastrointestinal diseases, conservation of natural resources, household savings from reduced fuel use, improved health outcomes and expanded education and training opportunities.

Many of the existing eligible projects in Cambodia and Lao PDR are household energy and water purification projects. These are not abstract carbon assets. They are interventions linked to everyday development outcomes.

This is where CORSIA could become more than an aviation compliance scheme. If designed well, it could channel capital into mitigation activities that also improve public health, household resilience and local livelihoods. If designed poorly, it risks becoming another carbon market where value accrues unevenly and host countries struggle to balance international demand with national climate plans.

That is why benefit-sharing, local employment, safeguards and transparent authorisation processes should be built into ASEAN’s approach from the start.

The region should avoid treating CORSIA merely as a credit export opportunity. It should treat it as a mechanism for financing additional mitigation that aligns with national priorities.

The Integrity Challenge Remains

CORSIA’s credibility will depend on whether the market can maintain integrity while scaling supply. Host country authorisation and corresponding adjustments are central to preventing double claiming. But the operational challenges are complex. Governments need capacity to prepare Article 6 reports and Biennial Transparency Reports. Carbon standards need to label eligible units clearly. Insurers need to clarify coverage for authorisation revocation and double-claiming risk. Airlines need standardised purchase agreements and clarity on liability if credits lose eligibility.

This is not glamorous work, but it is what will determine whether the market functions. The report’s recommendation for greater transparency across incoming supply is especially important. Airlines need visibility on which projects are aligned with CORSIA rules, which are seeking authorisation, which have received Letters of Authorization and which units are actually labelled and usable for compliance.

Without that transparency, procurement will remain slow and conservative.

Singapore Can Convene the Missing Middle

Singapore’s strongest contribution may be to convene what can be called the “missing middle” of the CORSIA market. On one side are host countries with mitigation potential. On the other are airlines with compliance needs. In between are project developers, crediting standards, insurers, exchanges, banks, law firms, brokers, development institutions and government agencies.

The market will only work if these actors coordinate.

Singapore has the institutional density to bring them together. It can host dialogues between ASEAN environment ministries, transport authorities and civil aviation regulators. It can support standardised contracting and procurement templates. It can help develop risk management and insurance solutions. It can promote transparent market data. It can enable demand aggregation among airlines.

This would align with Singapore’s broader role in carbon services, aviation, finance and sustainability. It would also give the city-state a way to support CORSIA even if its own domestic supply is limited.

The report’s title speaks of a billion-dollar opportunity. But the more important word is “unlocking”.

ASEAN does not yet have a billion-dollar CORSIA market. It has the ingredients for one.

It has existing eligible supply in Cambodia and Lao PDR. It has aligned projects that could become eligible with authorisation. It has a pipeline of future projects that could scale supply significantly by 2035. It has airlines that will need compliance units. It has growing Article 6 engagement. It has Singapore as a potential hub for finance, demand and market infrastructure.

What it does not yet have is a fully functioning system. The next phase will depend on whether governments can authorise credits without compromising NDCs, whether airlines can move from observation to procurement, whether market intermediaries can reduce transaction friction, and whether ASEAN can coordinate regionally rather than act only through fragmented national pathways.

For aviation decarbonisation, CORSIA is not the whole answer. It cannot substitute for Sustainable Aviation Fuel, fleet renewal, efficiency improvements or long-term technology breakthroughs.

But for the next decade, it is one of the few mechanisms available at scale to link aviation growth with verified mitigation finance.

For Southeast Asia, that makes CORSIA both a climate obligation and an economic opening.

And for Singapore, the opportunity is clear: not to be the region’s largest supplier of CORSIA credits, but to become the place where ASEAN’s CORSIA market is organised, financed, de-risked and made credible.